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How the Cloud Has Changed Point-of-Sale Technology

Wednesday, August 30, 2017

The point-of-sale (POS) environment has undergone an evolution over the past few decades in both technology and methodology. With restaurants and retailers looking to provide the best customer payment experience while simultaneously optimizing their internal capabilities and operations, a shift to cloud-based POS solutions is inevitable. Here, we’ll take a look back at POS systems of the past and how today’s technologists and developers are providing enhanced capabilities and substantial operational benefits in the development of POS solutions.

Legacy POS systems—also known as “traditional” systems—are characterized by stationary terminals that store payment data on local servers and run on a closed network. The 1980’s marked the arrival of legacy POS hardware devices such as electronic registers and credit card readers, but the most significant trend emerged in 1992 with the launch of the first POS software for Microsoft Windows.

This revolutionary software—and similar PC-based POS solutions—brought forth improved programming languages, new capabilities in software automation and replaced manual processes in areas such as payment transactions and inventory management. But as is the case with many innovative technologies, there were some growing pains. These computing capabilities were heavily reliant on specialized POS vendors resulting in expensive, complex development networks making it difficult to integrate with other systems and hindering the ability to scale for the future. The installation of a legacy POS system could take up to several weeks to complete due to the dependency on hardware and on-premise networks.

Christopher Sebes, a leader in the POS software industry and President of Heartland Commerce, recalls the process:

“First a professional IT site survey would be conducted, followed by ordering and configuring Windows terminals plus a local server, and then each computer was configured and installed. The entire location was then hardwired with a subsequent three days of system training. For enterprises, this required the creation of an entire backend of servers and test environments to test everything and aggregate the information. A truly complex and cumbersome process.”

Additionally, the collective value of a legacy POS system was impeded by the software programming methodology of the time. The lack of modular programming methods created a situation where businesses’ POS requirements were established upfront and could not be changed or optimized throughout the development process. Testing and customer feedback could be considered only after the solution was completed, often leading to the release of a flawed system requiring “fixes” to be implemented in future phases of development.

" 34% of retailers' software budgets are expected to be spent on the cloud in 2017

The answer to many of the issues affecting legacy systems comes in the form of cloud-based POS solutions, the first of which was introduced in the UK in 2001. These solutions store data on remote servers, make information accessible online and provide the ability for businesses to operate with both stationary and mobile POS terminals. The benefits of cloud-based solutions to business operations are a clear example of technologists and developers taking lessons from the past and applying them directly to the modern environment.

  • Flexible integration leading to agile development:
    While legacy POS software is characterized by rigid development code, the cloud-based environment has been developed to offer flexible integration with new or existing systems. Managing data in the cloud allows developers and businesses to integrate POS software without installing on-site servers or additional software to bridge the operating system and application—making the solution agile, scalable and without dependency on any particular hardware. The web-based cloud environment provides increased and mobilized data visibility, streamlines information management for multi-location businesses, decreases potential downtime and creates enhanced security solutions by automatically storing data and providing encryption.

  • Operating system agnostic with enhanced functionality:
    Businesses looking to take a step further are able to integrate application-based POS software, promoting ease of use for business owners and can be operating system agnostic—offering payment acceptance options for any method a customer chooses. Cloud-based technology has taken the POS from a cumbersome system of hardware solely used to accept payments and transformed it to become the center of a business’ operating environment—integrating with payroll, loyalty programs, CRM, inventory management and much more.

  • Business efficiency creating value for clients:
    Cloud-based systems can also have an enormous benefit to a business’ bottom line. Modern programming methods allow developers to optimize POS solutions in real-time, taking into account the feedback of those working with the system. With businesses operating more as “partners” rather than “clients,” POS developers put more of a focus on user experience and businesses can become more efficient in their operations. Accordingly, many POS developers are constantly improving backend software functionality and features of their applications. Businesses operating in the cloud benefit from this continuous value improvement at no added cost. And by eliminating onsite servers that require setup and continuous maintenance costs, businesses virtually eliminate depreciation and end-of-life costs for hardware. With all of the advantages of cloud-based technology, it’s no wonder 34 percent of retailers’ software budgets are expected to be spent on the cloud in 2017, up from 26 percent in 2016.

Reflecting on the evolution of POS solutions, from PC-based to cloud-based, has afforded technologists and developers the ability to examine the changing trends in the POS space and adapt to meet the needs of today’s businesses and customers. And with the cloud-based framework set up to help scale for the future, businesses can be primed and ready for the next phase in POS innovation.